Corporate risk management – a fresh perspective

in Advisory, 26.02.2020

Until recently, the “too big to fail” category belonged solely to banks. However, as more and more external market forces change the business environment, a new industry group is seen entering that territory: corporate business. Given this, are corporates doing enough to withstand the pressures of change?

Businesses that don’t dynamically respond to evolving external forces could soon be history. As these global shifts reshape the business landscape, they bring new risks for organizations, but new opportunities too.

The first few questions worth asking are also the simplest: What are the fundamentals of your enterprise-wide risk culture and how far have they come? Does your corporate strategy consider your risk appetite? If so, how do you ensure that the risks considered in your five-year strategy are still relevant? How do you manage your financial risks?

Of late many corporate institutions and industrial players have faced heavy losses or even bankruptcy at the hands of classic business model risks. Oftentimes, corporate strategies cover corporate risks in theory but not in practice. Remember: Any risk policy is only as good as its practical application.

So, where do we stand today?

You’ve heard of enterprise risk management: a strategic exercise popular among corporates and industrial players in choosing how to centrally manage enterprise-wide risk. Though a straightforward exercise for some organizations, for others, it remains a complex, long-term project without immediate, tangible benefits. The true payoff only comes with time, they say, so patience is key.

What can we do differently to stay afloat in a fast-paced business environment and turn risks into opportunities? At KPMG, we believe that in order to be successful, businesses need to take a holistic view of their current and future enterprise-wide risks.

Take a look at KPMG’s Dynamic Risk Assessment (DRA) methodology. As seen in the video below, the DRA can be used by organizations at all business stages to identify unique risk clusters. Armed with that knowledge, they can confidently embark on time- and cost-efficient initiatives. Acting as a sort of risk compass, KPMG’s DRA output successfully guides our clients to areas indicating the inherent risks and potential opportunities associated with the business.

The true value comes from aligning effective risk management and business management, ultimately complementing and feeding into the organization’s performance management. With this high level of integration, performance management can ensure the effective and efficient execution of company strategy and better meet shareholder objectives. As a by-product, it opens their eyes to the systemic opportunities available.

At KPMG we enable organizations to transform risk into value by focusing on both sides of the risk coin: the risks as well as the opportunities.

Our range of services are custom-made to fit your business needs as well as industry centric demands:

  • Risk management trainings and workshops – for all levels of hierarchy (board, c-suite, management, etc.)
  • Risk culture building
  • Risk strategy and appetite
  • Risk embedded financial planning
  • Risk digitization
  • Incident management and process control
  • Risk policies and procedures
  • Entity level risk assessment (covering internal and external risks)
  • Enterprise risk and performance measurement

For more information, please get in touch:

Sven Muehlenbrock
Partner
KPMG Luxembourg, Société coopérative
T: +352 22 51 51 – 6819
E: sven.muehlenbrock@kpmg.lu 

 

Qurat al Ain Khan
Non-Financial Risk Lead
KPMG Luxembourg, Société coopérative
T: +352 22 51 51 – 7241
E: quratalain.khan@kpmg.lu